Thirty trusts that would have made Isa savers millionaires

A full Isa investment between 1999 and 2021 of £266,560, with dividends reinvested, would have generated a tax-free pot of over £1mn, according to the Association of Investment Companies.

If the funds were invested in the top five trusts, Isa savers would have saved £1.5mn. Those trusts are HG Capital, Scottish Mortgage, Allianz Technology, Pacific Horizon and Polar Capital Technology. 

The data assumes a single lump sum invested in 1999, with a further annual investment being made on April 6 each year, until February 25 this year.

The AIC said there was a “clear tilt” towards technology and unquoted companies in the portfolios of the trusts.

HG Capital invests primarily in software and service businesses, and Scottish Mortgage has a strong focus on technology companies with exposure to Moderna, ASML and Tesla. 

Those two trusts, alongside Pacific Horizon, also invest part of their portfolio in unquoted companies.

Annabel Brodie-Smith, communications director at the AIC, said it has been a troubling time for markets, and while the human tragedy in Ukraine took precedence, investors have also been concerned about the large market falls since the start of the hostilities.

“In this context, it can be reassuring to look at investments with a long history of surviving crises and market crashes,” she said.

Brodie-Smith added the closed-ended structure of investment companies, with a fixed portfolio of assets, made them particularly suitable for long-term investing.

“This is because they can hold on to investments through market crashes, at a time when open-ended funds are often forced to sell in order to meet investors’ demand for cash. 

“Investment companies can also more readily invest in smaller companies and companies not quoted on public markets, which feature strongly in our list of top performers over this period.”

However, she added it was always worth spreading the risk.

“Having a diversified portfolio which suits your long-term needs is key, and investors who need guidance should speak to a financial adviser.”

Walter Price, portfolio manager of Allianz Technology, the technology sector was entering a golden age as demand for technology products was robust and revenue growth remained strong. 

“We live in a world where things are constantly changing and companies need to adapt, accelerating growth in technology solutions, including cloud, software-as-a-service, artificial intelligence and cyber security,” he said.

“We expect that the companies that can deliver consistent earnings growth should see attractive stock performance in the near term, though valuations will face their share of headwinds, particularly now that inflation is rising.”

Claire Shaw, investment specialist at Scottish Mortgage, said while the company was “delighted” with the returns generated for shareholders, the trust’s attention remained focussed on maximising returns over the next 10 years and beyond.

“Our core task is to find those companies that have the opportunity to deliver outsized returns and own them for long enough without interferences, so that the return accrues to our shareholders,” she said.

The 30 “Isa millionaire” investment companies

Source: AIC/Morningstar. 

sally.hickey@ft.com